JPMorgan Sounds the Alarm on Inequality

The first study from the newly established JPMorgan Chase Institute, released yesterday, offers an intriguing “big data” glimpse at economic insecurity in today’s U.S. economy. “Weathering Volatility: Big Data on the Financial Ups and Downs of U.S. Individuals” uses a stratified sample from the account and transaction data of almost 30 million JPMorgan Chase customers. Alongside credit information (monthly payments, outstanding balances, delinquencies) for the same individuals, the JPMorgan data measures variation in income and consumption, over a short and recent time span, with rare precision—and a notable tone of angst.

At a sample size of 100,000, the JPMorgan data set boasts nearly twice the sample size of the Current Population Survey (60,000 household respondents) and far exceeds the reach of the Bureau of Labor Statistics’ Consumers Expenditure Survey (7,000 households) or the various panel surveys (which have between 5,000 and 15,000 respondents). The resulting sample, broken into income quintiles (equal fifths of the underlying population), follows the structure of the Census numbers: the upper limit for its first quintile is $23,000, just over the Census/CPS threshold of $21,433 for 2013, and so on up to $104,500, the upper limit for the fourth (compared to the Census/CPS’s $106,101). But most importantly, the JPMorgan data consists of actual transactions—a much more precise and reliable measure of earning and spending than we can expect from survey respondents.

The findings, unsurprisingly, point to large swings in both incomes and consumption, both from year to year and from month to month. Seventy percent of those sampled see a swing in income of more than 5 percent from one year to the next; 84 percent see that volatility from month to month. Some of this is an artifact of the data collection (those paid weekly, for example, see their incomes bounce around just because some months have five Friday paydays and some don’t), but much of it signals the economic damage and insecurity that comes with stagnant wages, a tattered safety net, persistently high unemployment and underemployment, and raggedly unreliable work schedules.

Of interest to JPMorgan, of course, are the behavioral responses to income volatility, and the financial products (“innovative insurance or credit products“) that might be offered in response. The report devotes much of its energy to parsing the difference between “responders” (those whose changes in consumption tend to track changes in their income), “sticky optimists” (mostly higher earners) for whom consumption increases more than income by more than 10 percent, and “sticky pessimists,” for whom consumption lags behind increases in income by more than 10 percent.

Of more lasting interest is the way in which this report and dataset confirm and extend our understanding of the insecurity gap pried open by the simultaneous retreat of private labor standards and public policies—what Jared Bernstein has described as the “YOYO” (you’re on your own) economy (not altogether unrelated to that more common twenty-first-century motto, YOLO) and Jacob Hacker has dubbed the “great risk shift.” In the JPMorgan data, this emerges in the volatility of both income and consumption, which—especially for modest earners—capture the heavy reliance on EITC-padded tax refunds (big jumps in income in March and April) and the exposure to unexpected expenses.

The report finds not only that incomes and consumption are both volatile, but that they are volatile independently from one another: households face the risk of lost income, unanticipated expenses, or both. And that risk—for all but the highest earners—is accompanied by insufficient savings or assets to weather such a shock. By JPMorgan estimates, earners in the lowest quintile would need about $1,600 in liquid assets to withstand income volatility—but actual account balances average less than half that ($600). This gap is simply magnified for higher earners: in the second quintile, $2,800 is needed but only $1,400 is available; in the third, $4,800 is needed but only $3,000 is available; in the fourth, $8,200 is needed but only $6,200 is available.

These findings are important—especially considering the richness of the underlying data and their source. The data does have its limits; in the scholarship on this problem, some of the most interesting (and open) questions revolve around the historical timing and the distribution of income volatility. Covering only 2012-14, and with no greater demographic detail than gender and age, the JPMorgan data offers few insights here. But as a contemporary snapshot, drawn on a large and precise sample of income and spending, it is hard to beat.

Colin Gordon is a professor of history at the University of Iowa. He writes widely on the history of American public policy and is the author, most recently, of Growing Apart: A Political History of American Inequality.

In a scene from HBO’s The Deuce, streetwalker Ruby presents an officer with a property voucher to avoid arrest. Courtesy of HBO.

The Kurds

[W]hen we refer to all Kurdish fighters synonymously, we simply blur the fact that they have very different politics. . . right now, yes, the people are facing the Islamic State threat, so it’s very important to have a unified focus. But the truth is, ideologically and politically these are very, very different systems. Actually almost opposite to each other. —Dilar Dirik, “Rojava vs. the World,” February 2015

The Kurds, who share ethnic and cultural similarities with Iranians and are mostly Muslim by religion (largely Sunni but with many minorities), have long struggled for self-determination. After World War I, their lands were divided up between Iraq, Iran, Syria, and Turkey. In Iran, though there have been small separatist movements, Kurds are mostly subjected to the same repressive treatment as everyone else (though they also face Persian and Shi’ite chauvinism, and a number of Kurdish political prisoners were recently executed). The situation is worse in Iraq, Syria, and Turkey, where the Kurds are a minority people subjected to ethnically targeted violations of human rights.

Iraq: In 1986–89, Saddam Hussein conducted a genocidal campaign in which tens of thousands were murdered and thousands of Kurdish villages destroyed, including by bombing and chemical warfare. After the first Gulf War, the UN sought to establish a safe haven in parts of Kurdistan, and the United States and UK set up a no-fly zone. In 2003, the Kurdish peshmerga sided with the U.S.-led coalition against Saddam Hussein. In 2005, after a long struggle with Baghdad, the Iraqi Kurds won constitutional recognition of their autonomous region, and the Kurdistan Regional Government has since signed oil contracts with a number of Western oil companies as well as with Turkey. Iraqi Kurdistan has two main political parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), both clan-based and patriarchal.

Turkey: For much of its modern history, Turkey has pursued a policy of forced assimilation towards its minority peoples; this policy is particularly stringent in the case of the Kurds—until recently referred to as the “mountain Turks”—who make up 20 percent of the total population. The policy has included forced population transfers; a ban on use of the Kurdish language, costume, music, festivals, and names; and extreme repression of any attempt at resistance. Large revolts were suppressed in 1925, 1930, and 1938, and the repression escalated with the formation of the PKK as a national liberation party, resulting in civil war in the Kurdish region from 1984 to 1999.

Syria: Kurds make up perhaps 15 percent of the population and live mostly in the northeastern part of Syria. In 1962, after Syria was declared an Arab republic, a large number of Kurds were stripped of their citizenship and declared aliens, which made it impossible for them to get an education, jobs, or any public benefits. Their land was given to Arabs. The PYD was founded in 2003 and immediately banned; its members were jailed and murdered, and a Kurdish uprising in Qamishli was met with severe military violence by the regime. When the uprising against Bashar al Assad began as part of the Arab Spring, Kurds participated, but after 2012, when they captured Kobani from the Syrian army, they withdrew most of their energy from the war against Assad in order to set up a liberated area. For this reason, some other parts of the Syrian resistance consider them Assad’s allies. The Kurds in turn cite examples of discrimination against them within the opposition.